Should you opt for long-term health insurance?

The only solution to these problems is a comprehensive health insurance policy.

A health insurance plan financially protects you and your family from major medical expenses.

“Despite the many benefits of Medicare, the task of renewing your Medicare each year can be tedious. To make this process hassle-free and to reduce the burden of annual renewal, many insurance companies offer long-term health insurance policies, ”said Amit Chhabra, Health Insurance Manager at Policybazaar.com.

“Long-term health insurance policies usually give you coverage for more than a year. In India, there are policies that give you the choice of continuous coverage for two or three years, ”said Gurdeep Singh Batra, Retail Underwriting Manager, Bajaj Allianz General Insurance.

Now let’s take a look at the benefits of purchasing long term health insurance.

No renewal worries: Renewing your health insurance policy every year is an important financial task that you need to accomplish. “Once you buy long-term insurance, you don’t have to worry about renewing your policy for two to three years. In the case of a regular health insurance policy, you will need to set aside money for the annual renewal; In addition, failure to pay would result in the cancellation of the policy, ”Chhabra said. A long-term health insurance policy thus offers greater peace of mind.

Reduced premium: Long-term policies are less expensive than annual policies because a long-term discount is applied to premiums paid for several years together.

“Depending on which company you plan to choose, the premium for a two-year policy can range from 1.8x to 1.9x the one-year premium. Likewise, for a three-year policy, the premium range could be between 2.7 and 2.8 times the one-year premium, ”said Harshad Chetanwala, co-founder of MyWeathGrowth and registered investment advisor at Sebi.

Plus, with long-term health insurance plans, your premium is locked in for two to three years and becomes immune to price reviews. “The steadily rising medical inflation is one of the biggest reasons people look for long-term health insurance plans today,” Chhabra said.

Take the example of the Health Guard policy offered by Bajaj Allianz General Insurance. In the case of a Platinum Plan for an individual in Zone A, with a policy start at age 32, and an insured sum of ??5 lakh, the premium for a one year plan is ??10,600; for a two-year plan (age 33), it is ??20,352 and for a three-year plan (age 34), it is ??29 256. Thus, a discount of the long-term contract of 4% is applicable if a contract is chosen for two years and of 8% if a contract is chosen for three years.

Long-term health insurance plans may also be right for you in certain situations. “Usually the premium rates for health insurance are set according to the age group, where the premium will increase as you move from one age group to another, say from 36-45 to 46-50. Here, if you go for a two- or three-year policy at 45, there are reasonable savings in the long-term plans, ”Chetanwala said.

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However, even with lower premiums, when you go for a long term health insurance plan, you have to shell out a larger one-time amount. A similar higher amount should be expected every two or three years. Therefore, you need to plan accordingly.

“In addition, insurers offer the option of paying the health insurance premium in installments,” Batra said.

Tax matters: Health insurance premiums are eligible for deductions under Section 80D of the Income Tax Act. “In accordance with government guidelines, when the health insurance premium is paid for several years in the same year, the deduction is authorized proportionally over the years for which the health insurance benefit is available, under Subject to the deduction limits prescribed by Section 80D, “Batra said. Thus, you cannot claim the entire premium paid under Section 80D, but only an amount proportional to each fiscal year.

The coverage offered by a long-term policy is not much different from that offered by an annual policy. The differentiators will be the length of the policy and the long-term discount offered on the total premium. “My advice for buying a health insurance policy is that you should check the terms and conditions of the policy, understand what is covered and what is not. Go for a policy based on your health care needs and needs, ”Batra said.

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